CRESTVIEW HILLS, Ky., Oct. 17, 2013 (GLOBE NEWSWIRE) -- The Bank of Kentucky Financial Corporation (the "Company") (Nasdaq:BKYF), the holding company of The Bank of Kentucky, Inc. (the "Bank"), today reported its earnings for the third quarter ended September 30, 2013. For the quarter, the Company reported an increase in net income of 29% compared with the same period in 2012.
A summary of the Company's results follows:
| Third Quarter ended September 30, | 2013 | 2012 | Change |
| Net income | $5,415,000 | $4,196,000 | 29% |
| Earnings per common share, basic | $0.72 | $0.56 | 29% |
| Earnings per common share, diluted | $0.72 | $0.56 | 29% |
| Nine Months ended September 30, | 2013 | 2012 | Change |
| Net income | $13,990,000 | $13,135,000 | 7% |
| Net income per common share, basic | $1.87 | $ 1. 76 | 6% |
| Net income per common share, diluted | $1.85 | $ 1 .74 | 6% |
Robert W. Zapp, President & CEO, commented, "I am particularly pleased to report on the company's third quarter results as The Bank achieved more than one milestone. First and foremost, earnings for the quarter set a record by surpassing $5.4 million, which was 29% higher compared with the same period last year. Even in the midst of a significant slowdown in mortgage loan originations due to the rate environment, we have been successful in other lines of business and continue to focus on expense control and credit quality. For example, the Wealth Advisory Group continued to contribute double-digit revenue growth, credit metrics across the board maintained their positive trends, and I applaud the efforts of employees throughout the company who have kept expenses in check and have found ways to improve efficiency." Zapp added, "the second milestone is also significant as we operate in the shadow of the financial crisis and navigate through a slow moving economy. The Bank's total loans outstanding finished the quarter strong and exceeded $1.2 billion for the first time. Our team of lenders, business bankers, and branch managers are working together every day to meet the borrowing and banking needs of the community and we look forward to continued growth in the fourth quarter and into 2014."
The increase in net income in the third quarter of 2013 was primarily due to a $1,600,000 (73%) decrease in the provision for loan losses and a $195,000 (3%) increase in non-interest income compared with the third quarter of 2012. Contributing to the decrease in the provision for loan losses were lower levels of charge-offs and lower levels of adversely classified loans compared with September of 2012. Contributing to the increase in non-interest income were service charges on deposits, trust fee income and bankcard revenue.
Non-interest income increased 3% ($195,000) in the third quarter of 2013, compared with the same period in 2012, while non-interest expense decreased 1% ($80,000) from the same period last year. Contributing to the increase in non-interest income was a $504,000 or 22% increase in service charges on deposits, a $136,000 or 19% increase in trust fee income and a $72,000 or 8% increase in bankcard transaction revenue, which was offset by a $635,000 or 69% decrease in gains on the sale of real estate loans.
Net interest income remained relatively unchanged compared with the same period in 2012, decreasing $40,000 in the third quarter of 2013. The net interest margin, on a tax equivalent basis, decreased 14 basis points from 3.64% in the third quarter of 2012 to 3.50% in the third quarter of 2013. The decrease in the net interest income and the compression of the net interest margin was the result of the yield on earning assets falling faster than the cost of interest bearing liabilities. The yield on earning assets decreased 25 basis points from 4.02% in the third quarter of 2012 to 3.77% in the third quarter of 2013, while the cost of interest bearing liabilities only decreased 12 basis points from .47% to .35% in the same period. The decrease in the net interest margin was partially offset with an increase in earning assets of $55 million, or 4% on average from the third quarter of 2012. On a tax equivalent basis, the effect of the reduction in net interest income as a result of rate was a negative $653,000, which was partially offset by a $601,000 positive effect on net interest income as a result of the growth in earning assets.
The provision for loan losses decreased by $1,600,000 (73%) in the third quarter of 2013, compared with the same period in 2012. Contributing to this decrease were lower levels of charge-offs compared with the third quarter of 2012. The Company's annualized net charge-offs to average loans decreased from 1.39% in the third quarter of 2012 to .21% in the third quarter of 2013 while non-performing loans as a percentage of total loans were 1.37% as of September 30, 2013, compared with 1.29% as of September 30, 2012. The Company recorded $618,000 in net charge-offs in the third quarter of 2013 compared with $3,961,000 in the third quarter of 2012. On a sequential basis, the provision for loan losses of $600,000 in the third quarter of 2013 was $1,000,000 lower than the provision in the second quarter of 2013, while non-performing loans decreased from $18.9 million (1.60% of total loans) at June 30, 2013 to $16.4 million (1.37% of total loans) at September 30, 2013. Net charge-offs on a sequential basis decreased from $1,591,000 (.54% of loans) in the second quarter of 2013 to $618,000 (.21% of loans) in the third quarter of 2013. As a result of improving credit metrics, the Allowance for Loan Losses (ALL) has decreased from 1.43% of loans at the end of the third quarter of 2012 to 1.38% of loans at the end of the third quarter of 2013. On a sequential basis the ALL decreased from 1.40% at the end of the second quarter of 2013 to 1.38% at the end of the third quarter of 2013. The adequacy of the ALL is analyzed quarterly and adjusted as necessary to maintain appropriate reserves for probable incurred losses in the Bank's loan portfolio.
Total assets were $1.802 billion at the end of the third quarter of 2013, which was $80 million or 5% higher than the same date a year ago. Total loans increased $42 million (4%) and were funded by an increase in deposits of $58 million, or 4%. Total equity increased $7.6 million from the same date in 2012. In September 2012, the Company's Board of Directors voted to change from a semi-annual cash dividend to a quarterly cash dividend, commencing with the fourth quarter of 2012. This resulted in cash dividends declared decreasing from $.32 per share in the third quarter of 2012 to $.17 per share in the same period of 2013. The change in the dividend frequency also resulted in cash dividends decreasing from $.62 per share in 2012 to $.51 per share in 2013 on a year to date basis.
| The Bank of Kentucky Financial Corporation | ||||||
| Selected Consolidated Financial Data | ||||||
| (Dollars in thousands, except per share data) | ||||||
| Third Quarter Comparison | Nine months ended September 30, Comparison | |||||
| Income Statement Data | 9/30/13 | 9/30/12 | % Chg | 9/30/13 | 9/30/12 | % Chg |
| Interest income | $15,034 | $15,433 | (3)% | $44,780 | $46,782 | (4)% |
| Interest expense | 1,112 | 1,471 | (24)% | 3,567 | 4,929 | (28)% |
| Net interest income | 13,922 | 13,962 | (--)% | 41,213 | 41,853 | (2)% |
| Provision for loan losses | 600 | 2,200 | (73)% | 4,200 | 5,700 | (26)% |
| Net interest income after provision for loan losses | 13,322 | 11,762 | 13% | 37,013 | 36,153 | 2% |
| Non interest income | 6,056 | 5,861 | 3% | 17,758 | 16,820 | 6% |
| Non interest expense | 11,719 | 11,799 | (1)% | 35,153 | 34,668 | 1% |
| Net income before income taxes | 7,659 | 5,824 | 32% | 19,618 | 18,305 | 7% |
| Provision for income taxes | 2,244 | 1,628 | 38% | 5,628 | 5,170 | 9% |
| Net income | $5,415 | $4,196 | 29% | $13,990 | $13,135 | 7% |
| Per Common Share Data | ||||||
| Diluted earnings per common share | 0.72 | 0.56 | 29% | 1.85 | 1.74 | 6% |
| Cash dividends declared | 0.17 | 0.32 | (47)% | 0.51 | 0.62 | (18)% |
| Earnings Performance Data | ||||||
| Return on common equity | 12.44% | 10.05% | 239bps | 10.87% | 10.83% | 4bps |
| Return on assets | 1.21% | .98% | 23bps | 1.04% | 1.02% | 2bps |
| Net interest margin | 3.42% | 3.56% | (14)bps | 3.38% | 3.54% | (16)bps |
| The Bank of Kentucky Financial Corporation | ||
| Selected Consolidated Financial Data | ||
| (Dollars in thousands, except per share data) | ||
| Balance Sheet Data | ||
| September 30, 2013 | December 31, 2012 | |
| Assets: | ||
| Cash and cash equivalents | $102,448 | $151,832 |
| Investments | 389,179 | 381,537 |
| Loans held for sale | 2,435 | 16,324 |
| Total loans, gross | 1,201,193 | 1,195,409 |
| Allowance for loan losses | (16,632) | (16,568) |
| Premises and equipment, net | 22,517 | 22,494 |
| Goodwill and acquisition intangibles, net | 24,018 | 24,485 |
| Other assets and accrued interest receivable | 77,066 | 68,591 |
| Total assets | $1,802,224 | $1,844,104 |
| Liabilities & Shareholders' Equity | ||
| Total deposits | $1,529,505 | $1,570,007 |
| Short-term borrowings | 32,167 | 41,408 |
| Notes payable | 50,695 | 48,715 |
| Accrued interest payable and other liabilities | 14,606 | 13,534 |
| Total liabilities | 1,626,973 | 1,673,664 |
| Common stockholders' equity | 175,251 | 170,440 |
| Total liabilities and shareholders' equity | $1,802,224 | $1,844,104 |
| The Bank of Kentucky Financial Corporation | ||||||
| Selected Consolidated Financial Data | ||||||
| (Dollars in thousands, except per share data) | ||||||
| Average Balance Sheet Rates (presented on a tax equivalent basis ) | ||||||
|
Three Months ended September 30, 2013 |
Three Months ended September 30, 2012 |
|||||
|
Average outstanding balance |
Interest earned/ paid |
Yield/ rate |
Average outstanding balance |
Interest earned/ paid |
Yield/ rate |
|
| Interest-earning assets: | ||||||
| Loans receivable (1)(2) | $1,199,824 | $13,442 | 4.44% | $1,158,072 | $13,926 | 4.78% |
| Securities (2) | 386,644 | 1,835 | 1.88 | 369,707 | 1,763 | 1.90 |
| Other interest-earning assets | 29,039 | 73 | 1.00 | 32,781 | 71 | 0.86 |
| 1,615,507 | 15,350 | 3.77 | 1,560,560 | 15,760 | 4.02 | |
| Total interest-earning assets | ||||||
| Non-interest-earning assets | 155,984 | 147,283 | ||||
| Total assets | $1,771,491 | $1,707,843 | ||||
| Interest-bearing liabilities: | ||||||
| Transaction accounts | 848,512 | 327 | 0.15 | 796,346 | 280 | 0.14 |
| Time deposits | 316,435 | 519 | 0.65 | 369,327 | 934 | 1.01 |
| Borrowings | 80,733 | 266 | 1.31 | 70,445 | 257 | 1.45 |
| Total interest-bearing liabilities | 1,245,680 | 1,112 | 0.35 | 1,236,118 | 1,471 | 0.47 |
| Non-interest-bearing liabilities | 353,071 | 305,689 | ||||
| Total liabilities | 1,598,751 | 1,541,807 | ||||
| Shareholders' equity | 172,740 | 166,036 | ||||
| Total liabilities and shareholders' equity | $1,771,491 | $1,707,843 | ||||
| Net interest income | $14,238 | $14,289 | ||||
| Interest rate spread | 3.42% | 3.55% | ||||
| Net interest margin (net interest income as a percent of average interest-earning assets) | 3.50% | 3.64% | ||||
(1) Includes non-accrual loans.
(2) Income presented on a tax equivalent basis using a 35.00% tax rate in 2013 and 2012. The tax equivalent adjustment was $316,000 and $327,000 in 2013 and 2012, respectively.
| Selected Consolidated Financial Data | ||||||
| (Dollars in thousands, except per share data) | ||||||
| Average Balance Sheet Rates (presented on a tax equivalent basis ) | ||||||
|
Nine Months ended September 30,2013 |
Nine Months ended September 30, 2012 |
|||||
|
Average outstanding balance |
Interest earned/ paid |
Yield/ rate |
Average outstanding balance |
Interest earned/ paid |
Yield/ rate |
|
| Interest-earning assets: | ||||||
| Loans receivable (1)(2) | $1,195,042 | $40,226 | 4.48% | $1,142,833 | $41,832 | 4.89% |
| Securities (2) | 383,551 | 5,240 | 1.82 | 373,036 | 5,684 | 2.04 |
| Other interest-earning assets | 53,803 | 247 | 0.61 | 63,895 | 242 | 0.51 |
| Total interest-earning assets | 1,632,396 | 45,713 | 3.74 | 1,579,764 | 47,758 | 4.04 |
| Non-interest-earning assets | 158,527 | 148,025 | ||||
| Total assets | $1,790,923 | $1,727,789 | ||||
| Interest-bearing liabilities: | ||||||
| Transaction accounts | 874,240 | 1,081 | 0.17 | 810,382 | 1,175 | 0.19 |
| Time deposits | 333,857 | 1,743 | 0.70 | 384,549 | 2,953 | 1.03 |
| Borrowings | 77,024 | 743 | 1.29 | 75,657 | 801 | 1.41 |
| Total interest-bearing liabilities | 1,285,121 | 3,567 | 0.37 | 1,270,588 | 4,929 | 0.52 |
| Non-interest-bearing liabilities | 333,792 | 295,194 | ||||
| Total liabilities | 1,618,913 | 1,565,782 | ||||
| Shareholders' equity | 172,010 | 162,007 | ||||
| Total liabilities and shareholders' equity | $1,790,923 | $1,727,789 | ||||
| Net interest income | $42,146 | $42,829 | ||||
| Interest rate spread | 3.37% | 3.52% | ||||
| Net interest margin (net interest income as a percent of average interest-earning assets) | 3.45% | 3.62% | ||||
| (1) Includes non-accrual loans. | ||||||
| (2) Income presented on a tax equivalent basis using a 35.00% tax rate in 2013 and 2012. The tax equivalent adjustment was $933,000 and $976,000 in 2013 and 2012, respectively. | ||||||
| The Bank of Kentucky Financial Corporation | |||||||||
| Selected Consolidated Financial Data | |||||||||
| (Dollars in thousands, except per share data) | |||||||||
| Five-Quarter Comparison | |||||||||
| Income Statement Data | 9/30/13 | 6/30/13 | 3/31/13 | 12/31/12 | 9/30/12 | ||||
| Net interest income | $13,922 | $13,708 | $13,583 | $14,332 | $13,962 | ||||
| Provision for loan losses | 600 | 1,600 | 2,000 | 1,300 | 2,200 | ||||
| Net interest income after provision for loan losses | 13,322 | 12,108 | 11,583 | 13,032 | 11,762 | ||||
| Service charges and fees | 2,829 | 2,581 | 2,131 | 2,322 | 2,325 | ||||
| Gain on sale of real estate loans | 282 | 672 | 539 | 694 | 917 | ||||
| Gain on sale of securities | -- | -- | 274 | -- | -- | ||||
| Trust fee income | 846 | 850 | 852 | 749 | 710 | ||||
| Bankcard transaction revenue | 1,012 | 1,044 | 957 | 971 | 940 | ||||
| Gains/(losses) on other real estate owned | (201) | (308) | (4) | (226) | (67) | ||||
| Other non-interest income | 1,288 | 1,001 | 1,113 | 1,091 | 1,036 | ||||
| Total non-interest income | 6,056 | 5,840 | 5,862 | 5,601 | 5,861 | ||||
| Salaries and employee benefits expense | 5,969 | 5,988 | 5,913 | 5,869 | 5,909 | ||||
| Occupancy and equipment expense | 1,366 | 1,315 | 1,306 | 1,341 | 1,316 | ||||
| Data processing expense | 533 | 537 | 550 | 618 | 505 | ||||
| State bank taxes | 615 | 615 | 575 | 554 | 579 | ||||
| Amortization of intangible assets | 151 | 157 | 159 | 183 | 187 | ||||
| FDIC Insurance | 317 | 335 | 295 | 296 | 267 | ||||
| Other non-interest expenses | 2,768 | 2,718 | 2,971 | 2,809 | 3,036 | ||||
| Total non-interest expense | 11,719 | 11,665 | 11,769 | 11,670 | 11,799 | ||||
| Net income before income tax expense | 7,659 | 6,283 | 5,676 | 6,963 | 5,824 | ||||
| Income tax expense | 2,244 | 1,798 | 1,586 | 1,953 | 1,628 | ||||
| Net income | $5,415 | $4,485 | $4,090 | $5,010 | $4,196 | ||||
| Per Common Share Data | |||||||||
| Diluted earnings per common share | 0.72 | 0.59 | 0.54 | 0.66 | 0.56 | ||||
| Cash dividends declared | 0.17 | 0.17 | 0.17 | 0.17 | 0.32 | ||||
| Weighted average common shares outstanding | |||||||||
| Basic | 7,516,770 | 7,491,619 | 7,478,901 | 7,470,146 | 7,465,926 | ||||
| Diluted | 7,549,530 | 7,564,179 | 7,583,544 | 7,557,777 | 7,554,271 | ||||
| Earnings Performance Data | |||||||||
| Return on common equity | 12.44% | 10.48% | 9.66% | 11.79% | 10.05% | ||||
| Return on assets | 1.21% | 1.00% | 0.92% | 1.12% | 0.98% | ||||
| Net interest margin | 3.42% | 3.38% | 3.32% | 3.52% | 3.56% | ||||
| Net interest margin (tax equivalent) | 3.50% | 3.46% | 3.40% | 3.63% | 3.64% | ||||
| The Bank of Kentucky Financial Corporation | |||||
| Selected Consolidated Financial Data | |||||
| (Dollars in thousands, except per share data) | |||||
| Five-Quarter Comparison | |||||
| Balance Sheet Data | 9/30/13 | 6/30/13 | 3/31/13 | 12/31/12 | 9/30/12 |
| Assets: | |||||
| Cash and cash equivalents | $102,448 | $80,941 | $138,561 | $151,832 | $81,950 |
| Investments | 389,179 | 384,653 | 376,704 | 381,537 | 361,108 |
| Loans held for sale | 2,435 | 9,909 | 14,038 | 16,324 | 19,314 |
| Total loans | 1,201,193 | 1,185,449 | 1,187,742 | 1,195,409 | 1,159,074 |
| Allowance for loan losses | (16,632) | (16,650) | (16,641) | (16,568) | (16,585) |
| Premises and equipment, net | 22,517 | 22,560 | 22,559 | 22,494 | 22,714 |
| Goodwill and acquisition intangibles, net | 24,018 | 24,169 | 24,325 | 24,485 | 24,668 |
| Other assets & accrued interest receivable | 77,066 | 74,859 | 73,223 | 68,591 | 69,711 |
| Total assets | $1,802,224 | $1,765,890 | $1,820,511 | $1,844,104 | $1,721,954 |
| Liabilities & Shareholders' Equity: | |||||
| Total deposits | $1,529,505 | $1,504,829 | $1,558,933 | $1,570,007 | $1,471,246 |
| Short-term borrowings | 32,167 | 26,934 | 28,309 | 41,408 | 22,142 |
| Notes payable | 50,695 | 50,702 | 48,709 | 48,715 | 48,721 |
| Accrued interest payable & other liabilities | 14,606 | 13,196 | 11,604 | 13,534 | 12,224 |
| Total liabilities | 1,626,973 | 1,595,661 | 1,647,555 | 1,673,664 | 1,554,333 |
| Shareholders' equity | 175,251 | 170,229 | 172,956 | 170,440 | 167,621 |
| Total liabilities and shareholders' equity | $1,802,224 | $1,765,890 | $1,820,511 | $1,844,104 | $1,721,954 |
| Common shares outstanding | 7,528,618 | 7,498,014 | 7,482,776 | 7,470,236 | 7,467,396 |
| Average Balance Sheet Data | |||||
| Average investments | $386,644 | $387,526 | $376,370 | $373,008 | $369,707 |
| Average other earning assets | 29,039 | 46,886 | 86,110 | 71,139 | 32,781 |
| Average loans | 1,199,824 | 1,190,590 | 1,194,657 | 1,175,879 | 1,158,072 |
| Average earning assets | 1,615,507 | 1,625,002 | 1,657,137 | 1,620,026 | 1,560,560 |
| Average assets | 1,771,491 | 1,790,043 | 1,811,675 | 1,772,766 | 1,707,843 |
| Average deposits | 1,506,101 | 1,529,159 | 1,551,953 | 1,518,557 | 1,459,593 |
| Average interest bearing deposits | 1,164,947 | 1,215,858 | 1,244,360 | 1,207,238 | 1,165,673 |
| Average interest bearing transaction deposits | 848,512 | 882,084 | 892,609 | 848,302 | 796,346 |
| Average interest bearing time deposits | 316,435 | 333,774 | 351,751 | 358,936 | 369,327 |
| Average borrowings | 80,733 | 74,927 | 75,375 | 72,193 | 70,445 |
| Average interest bearing liabilities | 1,248,680 | 1,290,785 | 1,319,735 | 1,279,431 | 1,236,118 |
| Average common stockholders equity | 172,740 | 171,593 | 171,698 | 169,031 | 166,036 |
| The Bank of Kentucky Financial Corporation | |||||
| Selected Consolidated Financial Data | |||||
| (Dollars in thousands, except per share data) | |||||
| Five-Quarter Comparison | |||||
| Asset Quality Data | 9/30/13 | 6/30/13 | 3/31/13 | 12/31/12 | 9/30/12 |
| Allowance for loan losses to total loans | 1.38% | 1.40% | 1.40% | 1.39% | 1.43% |
| Allowance for loan losses to non-performing loans | 101% | 88% | 76% | 86% | 112% |
| Nonaccrual loans | $16,197 | $18,934 | $21,771 | $19,244 | $14,813 |
| Loans – 90 days past due & still accruing | 207 | 11 | 36 | 39 | 105 |
| Total non-performing loans | 16,404 | 18,945 | 21,807 | 19,283 | 14,918 |
| OREO and repossessed assets | 6,141 | 5,207 | 5,454 | 5,396 | 6,192 |
| Total non-performing assets | 22,545 | 24,152 | 27,261 | 24,679 | 21,110 |
| Restructured loans-accruing | 7,109 | 7,204 | 7,499 | 6,046 | 12,270 |
| Non-performing loans to total loans | 1.37% | 1.60% | 1.84% | 1.61% | 1.29% |
| Non-performing assets to total assets | 1.26% | 1.38% | 1.50% | 1.34% | 1.23% |
| Annualized charge-offs to average loans | 0.21% | 0.54% | 0.66% | 0.45% | 1.39% |
| Net charge-offs | $618 | $1,591 | $1,927 | $1,317 | $3,961 |
| Other Information | |||||
| Total assets under management (in millions) | 766 | 747 | 744 | 714 | 715 |
| Full-time equivalent employees | 351 | 361 | 364 | 365 | 370 |
About BKFC
BKFC, a bank holding company with assets of approximately $1.802 billion, offers banking and related financial services to both individuals and business customers. BKFC operates thirty-two branch locations and fifty-six ATMs in the Northern Kentucky market.